From peak shedding to low-carbon transitions: Customer psychological factors in demand response

Abstract

Incentive-based demand response (IBDR) programs have played an essential role in energy efficiency delivery, especially peak shedding. Recently, utilities have been challenged to consider the implications of low-carbon transitions and the wider benefits of IBDR. What's more, to fully activate demand-side resources, the IBDR scheme's design requires broadening the analysis beyond the traditional disciplines of economic entities and incorporating new psychological cues of customers. In this regard, this paper studies system operator (SO)'s carbon emissions abatement and incentive strategies in peaking shedding events when facing pressure from both emissions tax and customer non-economic response. We develop a trilayer economic-environmental-behavioral IBDR model for incentive price setting and investigate how carbon tax and customer psychological factors (CPFs) affect the scheme design. Initially, the interaction among hierarchical market participators is captured by a trilayer Stackelberg game. Then the SO's problem is formulated as multi-objective to minimize the procurement cost and emission. Moreover, CPFs are incorporated into the model by parameterized assumptions following behavioral economics. Results show that without consideration of CPFs will result in deviation in the DR model. With reasonable carbon prices, IBDR can be an effective tool for both energy efficiency improvement and decarbonization.